So I take out my old Sterling Engine (with generator & light) and fire it up. Runs perfect.
But I hear some light grinding noise. So I oil the cylinders and bearings with oil (properly the wrong kind).
Now it does not run anymore. I tried to wipe off the oil (could not reach all of the piston/cylinder). Still does not work!
What's going on?? Any help/sugestions??

I think it's complaining about being locked in a cage, go on it's not a Lion. Seriously though I think you might need to take out the power piston and clean the oil off of it, and wipe out the inside of the cylinder. Did you actually find where the unusual noise was coming from, was it the bearings, or the generator, or was it either the power cylinder, or the gland for the displacer rod. It could be that the displacer has developed a bit of a droop, and is touching the cylinder, this can some times be cured by turning the displacer up the other way. Some times the displacer cylinder can become distorted by over heating, but I don't think that will be your trouble, it usually only happens when the motor is run at red heat with a gas burner. The only motor of mine that has those sort of problems is my only commercial design a Bohm HB-A02. The main trouble is that the piston and cylinder are made of inappropriate materials causing higher than necessary friction, stainless steel piston in an aluminium cylinder. My own build motors have a cast iron piston in either a steel, or cast iron cylinder.
Ian S C

I took everything apart, cleaned it, put it back together, still does not run.
Then put some light spray oil on - same thing.
Bearing runs fine, no friction. Generator is disconnected.
Does the cylinder need some over-pressure or under-pressure when putting it together? Or a different gas than air?
I tried to push the cold piston into the cold cylinder at both positions of the hot piston (front and back), for more and less pressure in the cylinders, nothing helps.
I'm totally lost...

That's an alpha engine, so no gland and no displacer.
It should only be lubricated with extremely fine graphite powder.
I recommend cleaning pistons and cylinders with cotton q-tips and rubbing alcohol.
After you assemble it again, when you turn it over, you should feel some compression. If you don't, then the phase isn't right or the glass cylinder and pistons are badly scored.